The taxman can take a bite out of lap dancers' earnings after
a High Court judge ruled yesterday that the clubs where they perform are
not liable for VAT.

Spearmint Rhino Ventures, which describes itself as operating a
chain of "gentleman's clubs", won its case that the
dancer should pay VAT out of money she takes from her
"customers".

The clubs were appealing against a VAT tribunal decision which
found Spearmint Rhino was liable for the tax.

Mr Justice Mann, giving his ruling today, described the Spearmint
Rhino club in Tottenham Court Road, London, as a "typical
example".

"A member of the public pays pounds 8 for admission and on
entering goes into an area in which he (or she) may drink, socialise,
eat and watch partially-clad women dancing on a podium.

"At any one time (depending on the day, time and availability)
there are between 20 and 140 young women available to provide the
entertainment services in issue in these proceedings."

He said the services in question were when one of the dancers
provided private dances for the customers for money.

"A fee of pounds 10 is charged for a semi-nude dance; pounds
20 is charged for a nude dance.

"The dance is arranged as between the dancer and customer. In
addition to those services, the dancer and the customer can agree what
is called a 'sit down'. For pounds 250 (a sum which is in fact
negotiable) a woman can be engaged to sit and socialise with the
customer for an hour."

The judge found that HM Revenue's argument that the services
were supplied by Spearmint Rhino to the customer was wrong.

David Milne QC, representing Spearmint Rhino, said the dancer has
to pay the club for the facilities she uses and there was no contract
between the club and the men she "entertained".

He said the tribunal had made a mistake in ruling the dancers were
Spearmint Rhino's agents.

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